Lasting Power of Attorney: Duties & Obligations

Overview:

There are two types of Lasting Power of Attorney (LPA’s), namely Health &
Welfare and Financial. The focus of this blog is the Financial LPA.

A Financial LPA grants authority to the appointed attorney to make decisions in
respect of the donor’s (the person giving the authority) finances. This type of LPA
can allow, for example, the attorney to pay the donor’s bills, sell their property,
and deal with their bank accounts and investments.

Essentially after the LPA is registered the attorney is able to use the LPA
document to make certain financial decisions on the donor’s behalf, albeit with
the donor’s consent. It is therefore very important to take into consideration
the types of decisions an attorney will be able to make.

This was brought very sharply into focus by a case last year Purvis v Purvis
(2018).

The facts of the case:

The claimant claimed that her son, whilst he was administering her financial
affairs, under an LPA had misappropriated her money and in doing so
breached his duty and her trust.

The LPA’s had been registered in 2013 and the son had become a joint
account holder on his mother’s three bank accounts, a current account, and
two savings accounts.

The claimant’s husband had died. She had a substantial private pension from
which a sum of over £70,000 annually was paid into one of her bank
accounts.

She resided in a care home from where the staff raised concerns about the
sons management of his mother’s affairs to the Office of the Public Guardian
(OPG).

The OPG investigated and then made an application to the Court of
Protection who revoked the LPAs and ordered the son to account for his
dealings with his mother’s estate between 2013-2016.

The claimant’s daughter replaced the son in the management of the mother’s
affairs. The daughter instructed an accountant to look at the payments in and
out of the mother’s bank accounts. The accountant concluded that a total of
£940,000 had been paid into the mother’s accounts during the relevant period
of which £212,000 had been spent on the claimant’s needs, the rest had been
paid to the son, or at his direction, leaving only £5,000 left in the claimant’s
accounts.

The claimant’s case was that the son had misappropriated the rest, as well as
two cars belonging to the claimant, ans was liable to pay damages or
compensation for breach of duty and/or breach of trust. The son maintained
that he was a joint owner of the money within the accounts and that in any
event the money had been used for the claimant’s benefit.

Court verdict:

The Court ruled that the son was liable in damages for the misappropriated
funds. The Court held that:-

-An outright gift by the claimant to her son of all her money without regard
to her own needs was improbable.

-The son’s claim that the money had been gifted to him was inconsistent with
previous statements to the OPG and others that there had been no gifts.

-Making the son a joint account holder did not involve a gift of the money in
the accounts, but had been done to facilitate management of the money for
the claimant’s benefit.

-There could be no presumption of advancement because the claimant was
not under any obligation to provide for her son, and this presumption would
in any event be readily rebutted.

-Any money that the son transferred to himself was held on a bare trust for
his mother and he was not entitled to spend it on himself.

-The payments to himself were in breach of the duty under the Mental
Capacity Act 2005 to only apply money under an LPA in the claimant’s best
interests.

-The son had spent over £400,000 improving his own property and a
property in Spain that the claimant had never lived in. He had spent about
£360,000 on living expenses, £150,000 on school fees and £100,000 on cars.
-The Court did concede that it could have been reasonably supposed that the
claimant would have given her son her two cars for which she no longer had
any use and would have made a gift to him totalling £50,000 over the four
years.

-The Court ruled that the son was liable to repay an amount of just under
£670,000

Comments:

This case is a very good example of how the OPG is entitled to, and can,
step in to protect the interests of vulnerable people.

Equally though prevention is always better than cure. While there is no fool
proof way to protect a donor from such circumstances obtaining independent
professional advice is a must and can limit the possibilities of such abuses.

Obtaining professional advice will ensure that the LPAs put in place will
meet the donor’s needs as well as providing guidance on the duties of an
attorney. This will then allow the donor to consider the appropriateness of
any proposed attorney.

At Will Plans we can advise donors and their intended attorneys at a joint
meeting what their respective duties are and to ascertain whether both parties
are completely happy to proceed in terms of their suitability for the task that
lies ahead and whether they feel that their duties are too onerous, ambiguous
or complex to become part of a Lasting Power of Attorney (LPA)
arrangement.

To discuss any aspect of LPA registration please get in touch with Rob
Adams on 079100 19745 or email robadams.home@sky.com.